Weather index insurance has become a popular subject in agricultural risk management.
Under these policies farmers receive payments if they experience adverse weather for
their crops. Spatial basis risk is the risk that weather observed at stations does not correspond
to the weather experienced by the farmer. The objective of this research is to
determine to what extent spatial basis risk can be impacted by the interpolation technique
used to estimate weather conditions. Using forage crops from Ontario, Canada, as
an example, a temperature based insurance index is developed. Seven different interpolation methods are used to estimate indemnities for forage producers. Results show that
the number of weather stations in the interpolation area has a larger impact on spatial
basis risk than the choice of interpolation technique. For insurers wishing to implement
this type of insurance, more focus should be placed on increasing the number of available
weather stations. / October 2016
| Identifer | oai:union.ndltd.org:MANITOBA/oai:mspace.lib.umanitoba.ca:1993/31843 |
| Date | 21 September 2016 |
| Creators | Turenne, Daniel |
| Contributors | Porth, Lysa (Warren Centre for Actuarial Studies and Research) Boyd, Milton (Warren Centre for Actuarial Studies and Research), Hao, Xuemiao (Warren Centre for Actuarial Studies and Research) Coyle, Barry (Agribusiness and Agricultural Economics) |
| Source Sets | University of Manitoba Canada |
| Detected Language | English |
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